Office Depot 2008 Annual Report Download - page 35

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Investing Activities
We invested $330 million, $461 million and $343 million in capital expenditures during 2008, 2007 and 2006,
respectively. This activity includes investments in information technology, the opening, relocating and remodeling
of retail stores in North America and distribution network infrastructure costs. Additionally, a portion of our 2008
capital expenditures relates to our new corporate headquarters facility. As mentioned above, we have significantly
reduced our anticipated capital expenditures in response to the current economic conditions. Accordingly, we expect
capital expenditures to total approximately $150 million in 2009 as we are limiting store openings and remodel
activities in the near term. Included in the future capital expenditure projections is continued investment in our
enterprise-wide information technology project that includes capitalized software development costs and related
hardware.
Proceeds from the disposition of assets in 2008 and 2007 include proceeds from sale-leaseback transactions of $67
million and $64 million, respectively. The 2008 transactions related to retail store locations and the 2007 transaction
related to a European warehouse facility. The realized gains on the sale-leaseback transactions are being amortized
over the lease terms. During 2008, we also purchased certain non-operating assets for approximately $39 million.
We sold certain of these non-operating assets during the year. We placed restricted cash on deposit in the amount of
$6 million and $18 million, respectively, for transactions that were pending at the end of 2008 and 2007. During
2007, we also received $25 million as dividends from an equity method investment.
During 2008, we acquired a majority ownership position in businesses in India and Sweden. The company has the
right to acquire or may be required to purchase some or all of the minority interest shares of these businesses at
various points over the next few years. Also during 2008, we acquired under previously existing put options all
remaining minority interest shares of our joint ventures in Israel and China. During 2007, we acquired Axidata Inc.,
a Canada-based office products delivery company. Additionally in both 2008 and 2007, we funded previously
accrued acquisition-related payments for former owners of entities acquired in 2006. We do not expect to make
significant purchases of additional interests from minority shareholders in 2009.
Financing Activities
Cash used in financing activities in 2008 primarily resulted from net repayments of short-term borrowings under our
previously existing revolving credit facility. At the end of 2007, borrowings under that facility totaled approximately
$235 million, all of which was repaid during 2008. As mentioned above, this facility was replaced with an asset
based credit facility during the third quarter of 2008, which had an outstanding balance of approximately $139
million at the end of 2008. In conjunction with our asset based credit facility, we incurred debt issuance costs of
approximately $41 million in 2008. In addition to repayments on the revolving credit facility, we also repaid certain
other borrowings related to our international subsidiaries and made payments on capital leases.
Proceeds from the issuance of long- and short-term debt totaled $177 million and $8 million in 2007 and 2006,
respectively. The increase in 2007 was primarily driven by the decline in our operating cash flow, as we experienced
higher levels of short-term borrowings to support our working capital needs. Also, in connection with the sale of our
corporate campus in 2006, a portion of the proceeds was used to liquidate an existing mortgage on one of the
facilities.
The Board of Directors has authorized open market purchases of our common stock under repurchase plans that
were in effect during the three years presented. We made no share repurchases under the approved plans in 2008.
We purchased 5.7 million shares in 2007 at a cost of $200 million and 26.4 million shares in 2006 at a cost of $971
million. At the end of 2008, $500 million remained available for additional repurchases under the most recent board
approved plan. Our asset based credit facility has restrictions on share repurchases, and we do not expect to
repurchase shares in the near term. Proceeds from issuance of common stock under our employee related plans were
minimal during 2008 as a result of the drop in our stock price. In 2007 and 2006, these proceeds were $29 million
and $101 million, respectively. Additionally, upon the issuance of certain restricted stock awards, employees
surrendered shares to the company equal to approximately $11 million in 2007 and $13 million in 2006 in exchange
for our settlement of their taxes due on these shares.